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Debit card fraud: What it is and how to get a refund on a fraudulent transaction

4 steps to take if you've been a victim of debit card fraud.

Updated

There are many types of debit card fraud, and you may not know you’re a victim until you see your bank statement. Use this guide to find out what debit card fraud is, how to get a refund and how to protect yourself in the future.

What is debit card fraud?

Debit card fraud is when someone else obtains your card details and makes transactions on your card without you knowing. If you report a fraudulent transaction on your card, your bank should deactivate your card to prevent the person from making anymore transactions.

You should always check your debit card statement to make sure all the transactions listed are legitimate. This will help you identify any unusual activity.

Types of debit card fraud

There are several different ways a fraudster could get your debit card information:

  • Skimming device. The scammer can attach a skimming device to an ATM, gas pump or anywhere else you swipe your card and steal information from your card’s magnetic strip.
  • Hacking retailer’s online system. Hackers can gain illegal access to companies you’ve shopped at in the past and steal your information. They can also steal this information if you shop online at sites that don’t have a secure connection.
  • Stealing your physical card. A stranger, family member, disgruntled employee or anyone else could steal your physical debit card when you’re not looking and use it for purchases.
  • Phishing. This happens when a fraudster tricks you into thinking you’ve received a legitimate email from someone you trust, so you provide personal information.
  • Intercepting mail. Scammers could steal your debit card out of your mailbox — before you’ve even had time to realize it’s there — and use it to make fraudulent purchases.

What should I do if my debit card is lost or stolen?

Report a lost or stolen card immediately, so your bank can stop all transactions on your account and issue a replacement card.

According to the Electronic Funds Transfer Act (EFTA), the longer your wait to report a lost card, the higher your liability becomes. For example, if you report it within the first two days, you’re liable for up to $50 of fraudulent charges. Wait up to 60 days, and your liability increases to $500. After the 60-day mark, the bank is no longer required to refund fraudulent activity, which means you could be on the hook for the full amount.

4 steps to get a refund on a fraudulent transaction

While putting in a claim for a fraudulent transaction doesn’t guarantee a refund, this could be your best bet when other options have failed. Here are the steps to make the refund process easy as possible:

  • Step 1 – Contact the merchant or website that is responsible

    The best and easiest way to handle fraud is to contact the merchant or website itself. If the merchant cooperates with you, it could mean less hassle, especially if you tell them that you’re putting in a claim with your card provider.

  • Step 2 – Gather your records

    If the merchant or website refuses to cooperate and you’re entirely sure you’re the victim of fraud, then you can start to collect all the documentation between you and the merchant, including emails and receipts.

  • Step 3 – Proof of counterfeit or damaged goods

    If you’ve purchased electronics or jewelry online, and suspect that it’s fake, you may need to prove this. Log on to the product’s official website and find the list of authorized dealers — if the website or merchant is not listed, then you can show this to your bank. If the product is damaged, make sure you take a photo.

  • Step 4 – Call your card provider and put in a claim

    Your card provider should have a customer service line. It’s best to do this right when you’ve realized you can’t get your money back any other way.

How to protect yourself from debit card fraud

Here are steps you can take to prevent yourself from falling victim to debit card fraud:

  • Check your bank statement. Review bank transactions at least once a week to look for any unusual activity.
  • Set up account alerts. Get notified each time you make a transaction over a certain limit, so you can catch illegal activity right when it happens.
  • Check for card skimmers. When you’re out and about, check any card readers you’re about to use. If there are any loose parts or hidden cameras, don’t use it.
  • Make sure your network is secure. When shopping online, look for the green padlock symbol next to the URL. This ensures you’re using a secure site, which encrypts your data and lowers your chances of having your information stolen.
  • Shred paper statements. If you still get paper statements, make sure you dispose of them properly by shredding them. That way no one can dig through your trash and retrieve sensitive information.
  • Disable overdraft protection. When overdraft protection is enabled, your bank may transfer money from your savings account once your checking balance hits $0. This means that a fraudster could drain both of your accounts if they continuously overdraw on your account without you knowing.

Are credit cards safer than debit cards?

With the rise of identity theft and fraudulent transactions, more people are shying away from debit cards and relying on credit cards because they’re worried about security. But most debit cards come with a zero liability guarantee which protects consumers against any fraudulent transactions, which means security shouldn’t be your main worry.

Many people opt to use a credit card over a debit card because when someone illegally uses your credit card, they’re stealing money from a financial institution — not from you. As a result, the financial institution works really hard to get its money back. But when your debit card is used illegally, money is stolen directly from your account. It usually takes longer to dispute the charges, and your dollars are on the line if you can’t get your money back.

How do banks investigate debit card disputes?

If you suspect someone has stolen your debit card number, you should report any unauthorized charges to your bank immediately. It typically takes 10 days for banks to investigate a claim and refund the money. But it can go a lot longer. In the meantime, your bank may cancel your debit card if it was a point of sale transaction or close your account if it was an ACH transfer. If the fraudulent activity is severe or you suspect identity theft, you may need to file a police report.

Disputing a non-fraudulent charge takes a bit longer — usually 30 to 45 days. Your bank starts the process by asking you to fill out a form that lists the payee’s name, the date of the transaction, the transaction amount and the reason for the dispute. Then, the bank contacts the payee’s bank for a refund. During the investigation, your bank either gives you the money or holds onto it until the dispute is resolved. If the payee wants to fight the charge, they may provide evidence supporting their case. Then, the bank decides who wins the dispute.

Zero liability guarantees

If you’re having trouble coming to an agreement with the merchant, there’s always the option of zero liability guarantee. This is a guarantee offered by card issuers where a fraudulent or unauthorized transaction will not be completed. The money will not be removed from your bank account. Keep in mind, though, that you’ll need to have written proof that the transaction was unauthorized.

Make sure that you file a claim as soon as possible, because some debit cards have a time limit on their zero liability guarantee. Also, remember that not all debit cards offer this option, so check first.

Another precaution debit card providers have is to monitor your card use so they can identify any transactions that seem unusual to your regular pattern. Usually, the card issuer will get in touch with you to confirm or deny the transaction in question. Card issuers want to keep your business and they’re doing everything in their power to limit the likelihood of problems arising.

Fraudulent transactions or merchant dispute?

It’s also important to differentiate between fraudulent transactions and merchant disputes. A fraudulent transaction is the result of identity theft and involves the use of your debit card for charges that you did not authorize.

On the other hand, a dispute with a merchant usually refers to the buyer and seller not agreeing on things like the wrong item being sent. Most merchant disputes are resolved amicably since the merchant doesn’t want to run the risk of the card issuer refusing to work with the company. If this does happen, the merchant will have a hard time selling anything online.

If you do have to complain to your debit card provider, be sure you have a record of all your correspondence with the merchant so you can prove you attempted an amicable agreement.

Amicable resolutions

Disputes are often mistaken for fraudulent transactions and can be settled without the involvement of the bank. An amicable agreement is usually reached for the simple reason that if there are too many complaints against a merchant, the card issuer can refuse to work with the seller again, making it difficult to sell online. If you wish to complain to your debit card provider, then you should keep a record of all dealings with the merchant to prove that you attempted to come to a reasonable solution.

The bottom line

If you’ve been a victim of debit card fraud, there are several steps you can take to resolve unauthorized transactions and keep your account secure in the future. If you’re in the market for a new debit card, remember to compare your options until you find a card that suits your needs.

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10 Responses

  1. Default Gravatar
    JamesMarch 12, 2019

    My bank account was hacked and £20,000.00 was taken.The said it was my fault as I allowed the hackers into my account.They had posed as a telecom engineer. fixing hacked phone lines.I did not give any bank details to this person.Despite my appeals to the bank they will not return my cash. Have I any other course to take?

    • Avatarfinder Customer Care
      johnbasanesMarch 13, 2019Staff

      Hi James,

      Thank you for reaching out to Finder.

      I am sorry for what happened. The next course of action is to include law enforcement into this transaction. They may be able to retrace who these individuals are for you to be assisted in getting back your money. You may also need to seek legal advice if there is a way to work with the bank in getting a refund furnished based on what happened due to the security breach. Hope this helps!

      Cheers,
      Reggie

  2. Default Gravatar
    ManilaFebruary 18, 2019

    The thing is I don’t know about this maxmusic but they had taken NZD74 from my account. I have never heard about this maxmusic and I want my money back.

    • Avatarfinder Customer Care
      JhezFebruary 19, 2019Staff

      Hello Manila,

      Thank you for your comment.

      If you have an unauthorized charge on your credit card, you must file a dispute to your bank so they can investigate this for you and you will get your money back.

      Regards,
      Jhezelyn

  3. Default Gravatar
    LarryOctober 15, 2018

    I sent money to someone via a payment app for a vacation home rental that was turned out to be fake. I used a debit card. I have records of my communication with this person and a copy of the fraudulent contract that I signed with them. I have already filed a transaction dispute with the bank. What happens next / what can I do?

    • Avatarfinder Customer Care
      johnbasanesOctober 16, 2018Staff

      Hi Larry,

      Thank you for leaving a question.

      You have done everything to ensure that a refund will be processed back to you by filing the dispute via your card provider. You may also want to report this to your local police office who could further investigate on this. Hope this helps!

      Cheers,
      Reggie

  4. Default Gravatar
    ChuckApril 28, 2018

    I had 4 charges from random websites get taken out of my account today drained it of 133 dollars I contacted these websites with my concerns they refused refund but all so told me two diffrent emails that made accounts with my cc info that wasn’t me am i just want my money back what can I do

    • Avatarfinder Customer Care
      JoshuaApril 29, 2018Staff

      Hi Chuck,

      Thanks for getting in touch with finder.

      I understand that this can be a great source of frustration and inconvenience on your part. However, the first thing you need to do is determine if these transactions are legal or you gave your permission for them to get money from you in the first place. If not, it is time to report this incident immediately to your bank. They would most likely tell you the necessary steps you should do to get a refund. If you are eligible for a refund, they can tell you that as well.

      Generally, you’re entitled to a refund if there have been fraudulent transactions on your debit card, but like any financial product, you should read the terms and conditions when you apply. Every card provider has different policies regarding debit card fraud.

      To help you avoid future fraudulent transactions in the future and ensure you are protected against credit card scams, the following pages can help you:

      How to reverse unauthorised credit card transactions
      12 ways to avoid credit card fraud these victims wish they knew beforehand
      Credit card fraud, traps and scams: A guide to minimising the risks

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!

      Cheers,
      Joshua

  5. Default Gravatar
    MunishSeptember 26, 2017

    Someone has withdrawal money with clone ATM from my SBI account. What should I do?

    • Avatarfinder Customer Care
      HaroldSeptember 27, 2017Staff

      Hi Munish,

      Thank you for your inquiry.

      If the withdrawal from your account is unauthorized. You would need to contact your bank immediately that way they can legally guide you on this matter.

      I hope this information has helped.

      Cheers,
      Harold

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